Depending upon which network of unsubstantiated rumors you listen to, Bayonne Mayor Mark Smith was allegedly escorted out of City Hall in handcuffs recently while City Business Administrator Steve Gallo was grilled for hours by the Federal Bureau of Investigation. But “none of it is true,” said Mayor Mark Smith last week, laughing over the volley of rumors that circulated in the city since FBI agents presented the city with a subpoena to examine the work station of an employee.

The employee has since been suspended with pay, although he has not yet been officially charged with any crime. But what’s the investigation about?

The most prominent of the rumors claims that the FBI is investigating whether a specific employee, operating under orders from higher-ups, illegally issued federal Community Development Block Grant funds to favored contractors, who then overcharged the city and kicked back the overcharges to politicians via campaign contributions.

“If anyone did that, they ought to be charged,” Smith said last week. “It’s not true. It hasn’t happened, but if someone did that they ought to go to jail. None of it happened.”

City officials say it is very difficult to steer contractors in the way the rumors had described, noting that CDBG loans – which are at the heart of the rumors – are issued after homeowners approach contractors to work.

“The homeowner comes into the city with quotes and asks if we can give them the loans,” a city official said. “If anyone tried to push a contractor onto someone, it would raise all kind of red flags.”

Some of the rumors focused on the recent arrests associated with an online gambling ring that resulted in associates of the Genovese crime family being charged along with others. Still more rumors connected the dots to an even older case involving local banks, one that was settled several years ago with charges against one individual and fines to a local bank.

Interviews and questions, but no arrests

In all rumors, the FBI allegedly was grilling a number of government officials from the mayor down to local department heads, although none of those who repeated the rumors had actually spoken with any eyewitnesses to these interviews.

“That’s because there were no interviews to my knowledge,” said Public Safety Director Jason O’Donnell, himself rumored to have been questioned. “The only thing that has happened is that the FBI asked to look at the work station of one individual who worked in City Hall, and we have fully cooperated in that. But no one was interviewed, at least to my knowledge, and I certainly haven’t been.”

Smith confirmed that the FBI did seek out the information, but that was the extent of contact he and other city officials had, except to suspend the individual who was subject of the investigation. Smith said the activities being investigated were unrelated to city operations.

__________“That’s because there were no interviews to my knowledge.” – Public Safety Director Jason O’Donnell___________

Related to North Bergen?

These rumors came at a time when there are probes ongoing elsewhere in Hudson County, particularly in North Bergen, where former North Bergen Public Works Superintendent James Wiley pleaded guilty to having town employees perform tasks at his home during work hours. Wiley also claims he and others were ordered to work campaigns while still on the time clock for their city, including at least one campaign run in Bayonne.

Local officials concede Wiley was among a group of people who apparently volunteered for Smith’s 2008 campaign for mayor, but that no one local had requested them and for the most part they were not used for any of election-related activities.

“I saw Wiley briefly,” said one member of the 2008 campaign. “But he and the others most likely just stood out front of campaign headquarters smoking cigarettes and drinking coffee. We couldn’t send any of them door-to-door or to hand out fliers; they could have scared people.”

Wiley implied that some higher official in North Bergen had ordered the workers to do campaign work, and raising speculation among a number of locals that this was due to Smith’s alliance to powerful state Senator and North Bergen Nicholas Sacco.

“That’s a ridiculous idea,” said a key member of the Sacco administration. “Nobody in their right mind would order workers to campaign while they are still on the job. Maybe someone would send them to campaign after-hours, and then they would be volunteers, not employees.”

A jovial Mayor Smith grinned and pointed to himself while waiting to march in the Bayonne Hispanic Parade on Sept. 30.

“Do I look like I’m worried about any of this?” he said. “People have nothing better to do than spread this stuff, and we all know who they are.”